Westports projects lower TEU growth as Covid-19 impact lingers

The group handled a lesser container throughput of 7.73 million TEUs during 9M20 as container volume and demand were affected


WESTPORTS Holdings Bhd foresees low container terminal capacity growth this year due to the adverse effects of the Covid-19 pandemic despite forecasting a rebound in the second half of 2020 (2H20) compared to 1H20.

Its group MD Datuk Ruben Emir Gnanalingam Abdullah said the momentary pause in the relentless volume growth in recent years provided Westports time to evaluate, plan and strategise for the next phase of growth.

“This ranges from ongoing process improvements to streamline remote or electronics processing, as well as preparing and planning for the mega Container Terminal (CT) expansion from CT10 to CT17.

“Westports is committed to reinforcing Port Klang as one of the main transhipment hubs in South-East Asia for international container shipping alliances,” he said in a statement yesterday.

Westports’ net profit in the third quarter ended Sept 30, 2020 (3Q20), rose 28% year-on-year (YoY) to RM203.85 million mainly attributed to the growth in container throughput.

This led to higher earnings per share of 5.98 sen for 3Q20 compared to 4.67 sen in the previous year, while revenue for the quarter also increased 14.75% YoY to RM528.36 million.

Ruben shared that Westports’ container volume declined by 4% for the first nine months of 2020 (9M20), as many countries were emerging from the various forms of lockdown arrangements or movement restrictions.

“As we enter into 4Q, many regions and cities have reimposed various forms of lockdown again. However, we cautiously expect a less adverse impact from the latest lockdown, compared to 2Q as societies and economies adjust to these movement restrictions,” he said.

Westports handled a lesser container throughput of 7.73 million twenty-foot equivalent units (TEUs) during 9M20 as container volume and demand were affected by the various forms of lockdown, especially in the previous quarter, to minimise the transmission of Covid-19.

Its container throughput improved in 3Q with a 6% growth to 2.93 million TEUs as global economic activities resumed after the earlier lockdowns.

Both local and transhipment containers saw volume increases.

The group invested a RM213 million in capital expenditure during 9M20 to enhance its container and conventional operational capabilities despite a lower level of container throughput to support its long-term growth and also Port Klang.

For 9M20, after tax provision of RM156 million or an effective tax rate of 24%, Westports reported a profit after tax of RM491 million.

The group has temporarily adopted a payout ratio of 60% to conserve cash as it expects the land reclamation for the multibillion CT expansion to commence in 2021.

Westports paid its first interim ordinary dividend amounting to RM172.2 million in August, while the second interim ordinary dividend will usually be paid in March of the following year.